According to a newly published survey from software accounting firm Reckon (ASX:RKN), 54% of SMBs think they might be left behind as the digital economy develops – with a whopping 83% lacking confidence in delivery of the NBN.
The survey also found that a lack of government support and technology infrastructure are seen as key barriers to success in setting up business in Australia for small businesses.
According to the survey one in three (33%) of small businesses admit that it is tough to set up shop here.
But despite the fail-rate, Reckon says the local small business landscape continues to prosper at a steady pace, demonstrating resilience in business owners.
The survey also found that the top three solutions respondents want from the government are better tax offsets (53%), improved Internet connectivity to support them in building an omni-channel presence (32%) and more start-up incentives (26%).
“The Australian small business landscape has undergone massive changes in the past few years alone, the most major being the shift from traditional bricks-and-mortars to online. With that, local businesses now find themselves having to compete in the global marketplace,” said Sam Allert, managing director ANZ at Reckon.
“For small businesses to survive and thrive online in the presence of global players like Amazon, not only do they require a more robust and reliable technology infrastructure, they need to become more digital savvy.
“What we need to be doing as a nation is enhance our overall technology capabilities. To achieve this, there needs to be a concerted effort between the government, private sector and small businesses.
“In addition to better incentives and greater investments from the government to build up our infrastructure, technology providers can also play a part by educating, upskilling and providing small business owners with the digital know-how to innovate and ultimately, effectively compete against global brands.”
In terms of the outlook for small businesses this year, 38% of respondents say declining customer demand is the most likely factor to affect their profitability in 2018.
But, one in three (33%) indicate that government policies will be the factor that affects them the most, while more than one in four (27%) agree that cash flow will continue to be an ongoing issue, fuelled by the lack of late payments legislation.
To alleviate cash flow issues, 30% of small businesses operate on a loan, with the majority of respondents turning to traditional banks as the first port of call, followed by their family (20%).
According to Reckon, this is despite the challenges that come with gaining access to finance from banks, as they tend to favour applicants with equity in physical property and a good track record – both of which small businesses often struggle to prove.
“The majority of Australian small businesses have a general payment term of 30 days for good reason – without a healthy cash flow cycle, business growth can be severely restricted,” said Allert.
“Cash flow is one of the highest ranked pain point that keeps small businesses up at night, and it is no secret that they still struggle to get their loans approved by traditional lending sources.”
“It’s not a widespread trend yet, but we have seen a rise in demand for online lenders in recent years, with small businesses increasingly turning to these non-traditional alternatives for loans. While banks can take weeks to approve funds and require a full business forecast, a non-bank lender can provide working capital quickly without the hassle. This is something that really appeals to small business owners and sole traders, who do not have the luxury of time to spend away from their day-to-day operations creating business plans.”